Unit 4 Marketing principle Starbucks case

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The paper is trying to evaluate the
marketing strategiesof Starbucks and their international expansion. The paper
would look into different elements of marketing process, focusing on STP
strategy, deploying marketing mix elements and using marketing mix elements in
different situations for the organization. Present paper would deploy these
marketing principles in order to help Starbucks to evolve with exclusive marketing
planning process.

Start your report by explaining the various elements of marketing process
based on the Starbucks

Marketing is nothing but a managerial
and social process where in Organizations attempts to develop a strong
relationship with customers by offering valuable services to customers in order
to earn value from them. It is very imperative to understand what existing and
potential customers want to know their needs so that appropriate services can
be offered to them and in return value can be generated from customers. And
customer relationship management activities (Best, 2004) are a very important tool in this. The process of analysing marketing opportunities, selecting target markets, developing the marketing mix
and managing the marketing effort is known as marketing process.Four elements of marketing process
for Starbucksinclude:

1.Analyzing the situation faced by
Starbucks at present: Situation analysis can be viewed in terms of analysis of
the external environment and an internal analysis by the firm. SWOT (Strengths, weaknesses, opportunities and
threats) analysis framework can be used to conduct internal analysis of the
organizationfor Starbucks while external analysis depends upon the external
environment such as political, environmental, technological, social, economic
and legal.

2.Developing unique marketing strategy
for the organization: unique marketing strategy is derived by the
organizational objectives of Starbucks. Market Segmentation, target market selection
and positioning the product within the target market would be defined for Starbucks
and uniquemarketing strategy would be developed.

3.Develop elements of marketing mix for
Starbucks: Based on marketing strategy for Starbucks following actions will be
taken on marketing mix elements

a.Product development

b.Pricing decision

c.Distribution contracts

d.Promotional campaign development

4.Implementation and control of
marketing strategy: Result of the marketing efforts would be monitored closely.
With changes in market conditions, marketing mix elements will be adjusted
accordingly.

1.1 Prepare a SWOT analysis of Starbucks and explain the importance of
using SWOT analysis marketing tool

Starbucks Corporation is an
international coffee and coffeehouse chain based in Seattle,
Washington, United States. Starbucks is the largest coffeehouse company in the
world. SWOT analysis of
Starbucks can be given as under:

Strength

Weakness

1.Global coffee brand built upon a reputation
for fine products and services

2.Image of quality products

3.Starbucks has a significant geographical
presence across the globe (10000
café and 17000 coffee shops in 40 countries)

4.High profitability ($8.0 m in FY 2013)

5.Starbucks
is known for its highly knowledge base employees.

1.Price of the products of Starbucks is very high as compared to the
products offered by its competitors such as Costa Coffee and McDonalds

2.Competition between two stores of the company is another area of
concern

3.Additional food products such as Salad and Sandwiches are creating low
profit.

4.By aggressive expansion and high saturation due to overcrowding in the
market leads to self-cannibalization and diminishes long term growth targets
of Starbucks

Opportunities

Threat

1.With increase saturation and self-cannibalization of the US market,
Starbucks international strategy becomes very important. Starbucks has made
good inroad into many countries by making joint ventures.

2.Starbucks has leveraged the use of mobile applications and has an
investment partnership with Square, a mobile payments app that is integrated
with its Starbucks app. This creates an ease of use process for customers,
aligns customer loyalty through reward programs.

3.Adding new products into its offerings to increase revenue.

4.New distribution channel.

1.Biggest threat that Starbucks faces with the market being at a mature
stage, there is increased pressure on Starbucks from its competitors like
Dunkin Brands, McDonalds, Costa Coffee, CCD, mom and pop specialty coffee
stores.

2.High price of Starbucks’s products is a threat to lose customers to its
competitors.

3.Huge investment in large number of stores can leads to financial threat

4.Rising dairy costs.

5.Market saturation and economic slowdown.

6.The shift of consumers toward more healthy products and the risk of
coffee culture being just a fad represent a threat for Starbucks going into
the future.

SWOT analysis is animportant framework
for generating strategic alternatives from a situation analysis. Identification
of SWOTs is important because they can inform later steps in planning to
achieve the objective
for Starbucks. SWOT is the
foundation for evaluating the internal potential and limitations and the
probable/likely opportunities and threats from the external environment.

1.2 Next present and evaluate the marketing objectives of Starbucks and
explain how defining marketing objectives can help a business to develop
marketing strategies. How does this contribute to the benefits of costs such as
market orientation as customer satisfaction, desired quality, service or consumer
care, relationship marketing etc.

The marketing objectives of Starbucks
can be given as under:

§To reposition their brand:To retain existing consumers and build new consumers base
brand repositioning is required to differentiate Starbuck’s brand from its competitors.

§Promotional Strategies:Starbucks will continue to adopt
new promotional outlets in order to reach consumers.An active participation on Web 2.0
platforms, televisions advertisements, and email marketing will all be utilized
to promote products and initiatives.

§Development of new business: Adding new food categories, adding new stores with new
national and international locations is imperative toincrease Starbucks
business.

§To develop global marketing mix: Global marketing mix with local marketing strategies
according to specific market is very important to become a global brand.

Marketing strategy of the
organization is dependent upon the objectives of the organization. Therefore it
becomes important that Organizational objectives should be defined properly. By
defining marketing objectives for Starbucks their target audience and overall
goals would be clear and these would form the marketing mix for the
organization.

Market orientation helps Starbucks to
collect the information pertaining to customers and fulfilling these needs by
making them a part of the overall marketing objectives for the organization (Baines et al, 2011).

In the next task you will focus on the concepts of segmentation, targeting
and positioning (STP strategy)

2.1 Start this task by analyzing three micro and three macro
environmental factors influencing marketing decisions in Starbucks

Three macro environmental forces
affecting decision making in Starbucks can be given as under:
1. Political and legal factors:Starbucks needs to import coffee beans from
different parts of the world. Starbucks must worry about increases taxes and
tariffs from many parts of the world like South America and Africa. Because of
the nature of politics, it may be very hard to predict how reliable their sources of beans are, so
Starbucks must continually has alternatives for importing coffee to supply its
demands.ers looking for taste of
good coffee and premium brand

In task 3 you will start analyzing marketing mix elements which are in
the heart of all marketing strategies. As before, think about Starbucks while
addressing all the elements of this task.

One
of the major concepts in the modern marketing is once the company has decided
its overall marketing strategy than it should plan the details of the marketing
mix. "Marketing mix is the set of controllable, tactical marketing tools
(product, price, place, and promotion) that the firm blends to produce the
response it wants in the target market" (Kotler and Armstrong, 2006).
Starbucks has a made good decisions on marketing mix tool.

Figure 1: Showing the marketing mix
elements

3.1 Start by explaining how products in Starbucks are developed in order
to make sure that competitive advantage is sustained. You should focus here on
differences in products between Starbucks and different coffee shop. Provide at
least two examples.

"Product
means the goods and services combination the company offers to the target
market". Starbucks has used Brand name, Quality, Variety and Services as
their Product tool which can be concluded by this statement, Starbucks with a
good Brand name provides best Quality and with the Variety of Products. Initially Starbucks
started with the coffee than it has included non-fat milk, cold blended
beverages. But and services (Reid &Bojanic, 2010). unit 8 research project

3.5 Finally at the end of this task you were asked to provide short
analysis of additional elements of the extended marketing mix based on the
examples of Starbucks.

There are basically three added
components of Starbucks which are important in order to extend their marketing
mix and these elements are processes, physical evidences and People. Starbucks
is a very process oriented organization. It invests money and time in framing
processes and making sure that all these process are implemented properly in
the organization. Starbucks makes use of the blue printing technologies like
flow charts and presentations through diagram in order to improve the planning
and processes deployed in the organization (Britten, 2012). Starbucks have several processes
such as Artificial intelligence, stimulation and forecasting in place so as to
improve the overall forecasting and data analysis processes deployed in the
organization. Human resources are the vital component of the overall strategy
for organization. Starbucks invest lot of cost in hiring right people; make
special training arrangements to train the hire people so that they can polish
as per the objectives of the organization. Only train staff can offer best
services and products to its customers. For that Starbucks has deployed
exclusive training program and recruitment program. Some of the additional
privileges offers by Starbucks include free Wi-Fi, music, trained employees,
art work, comfortable chair and right combination of lighting. All these stuff
helps Starbucks in providing a pleasant ambiance to its customers. The store
environment in Starbucks is comfortable for students, researchers and readers
etc.

Last task is to present your ability to use the marketing mix in
different contexts.

4.1 To begin with you are asked to plan and prepare marketing mix for two
different segments of market in Starbucks. Use here an example of one existing
segment and propose the second, new one. Design for both segment marketing mix
plan (4P).

The two segments selected in the
present context are Segment A and Segment B wherein segment A is existing
consumer segment of Starbucks. Segment A consist of young age consumers in age
range from 19 to 29 years having educational qualification as graduate or
post-graduate and income range in moderate to high range. Segment B for
Starbucks would include people in age from 20 years to 45 years, married,
graduateall coffee demand while Starbucks needs to make aggressive expansion in
world market for promoting their products. There are number of factors which
differentiate international market and local/domestic markets. Some of these
factors are international joint ventures, gender issues, cultural differences,
marketing channels and consumer preferences etc. It was in 1996 when Starbucks
made an attempt and enter into joint venture with one of the local player of
Japan named SAZABY Inc prevailing in market (Nagle
and Holden, 2012). Starbucks
adopted strategies such as buying out competitor’s lease, intentional
operations at loss andclustering of services within a small area. Starbucks
make their international foray in UK with buying out Seattle coffee company and
impacted consumers through capital and influence of this company. Using local
taste, deploying global human resource and mergers & acquisition in
international markets are some of the major global strategies deployed by
Starbucks in international markets.

This paper has focused on laying down
marketing strategies for Starbucks. This paper is highlighting the analysis of
internal and external environment, deployment of STP strategy; building
marketing mix and analysis of marketing mix in different situations overall
marketing planning for Starbucks have been deployed. This would help Starbucks
in order to maintain competitive advantage in highly competitive marketplace.